Monday, March 16, 2009

Twenty million migrant workers from the Chinese countryside, who have lost their jobs in the aftermath of the global financial crisis, do not wish to go home. Driven by the export boom, nearly 130 million rural Chinese had left their farms to toil in urban workshops and construction sites, sending money home to supplement the meager agricultural income. Unfortunately last year the Wall Street brought down the Main Street, which in turn resulted in the closure of factories in China which churned out products enjoyed by American consumers with borrowed money. Last month the Chinese government revealed that 20 million of these workers have lost their jobs and will possibly need to return to their rural homes.

The workers do not want to go home as their income from tilling their small farms is woefully inadequate to provide them with a comfortable existence and even a modicum of savings and security. The per capita rural income in 2007 was less than one third of what the urban Chinese enjoyed. Despite the harsh conditions of work and stay in the cities and the emotional pain of living separately from their loved ones, they willingly accepted this existence to be able to provide their families with a better quality of life.

The official deliberations

Not surprisingly, the welfare of these migrant workers and the economy in general was salient in the deliberations of China’s top legislative body (National People’s Congress or the NPC ) and the top advisory group (CPPCC) which meet every year in Beijing around this time. As can be expected in China, scale is important and the meetings are held with great pomp and ceremony. The sheer size is staggering – NPC has nearly 3000 deputies, and the CPPCC National Committee has 2,235 members. Unlike the House of Lords in UK and the Rajya Sabha in India, attendance is high even in the advisory body and members are expected to remain awake during the proceedings. The publicly released pictures of the meetings show the members in a state of significant alertness, despite the soporific speeches of fellow members and leaders. Previous meetings have debated, modified and adopted other important issues such as the Labor Contract Law and the Property Law. Discussion on China’s economy has always been prominent, but the tone in the past has been congratulatory and exuding pride. Economic achievement offered much fuel for pride in the past (in the 2008 meeting of the NPC the Chinese Premier Wen Jia Bao had proudly declared that China's economy grew by 65.5 percent over the past five years, or an average annual increase of 10.6 percent)

Not only is the agenda this year single-mindedly focusing on economic development, for the first time this year, in recognition of the need of the hour of judicious spending, the agenda of the meeting has been trimmed 10 days from the usual 14 days. The euphoria of a decade long galloping economy has evaporated and the party officials are scratching their heads for how to keep the gravy train going and continue to provide jobs for the laid of workers as well as the new workforce entering the market (including a crop of 5.5 million university graduates every year). The languishing countryside and the widening urban-rural income gap was always an area of anxiety. Guided by this concern, the party leadership in the past raised slogans like “the new socialistic countryside” accompanied by supportive actions such as abolishing the tax on agricultural income. The 2009 meeting clearly recognized that more needs to be done.

The rural stimulus

Research done by TNS in the cities, indicates that the urban Chinese though fearful of the global crisis (63% think that they will be affected slightly and 28% significantly) still sport a staunch optimism. However the rural folks – particularly the migrant workers are already in distress. The workers are obviously not happy to lose an income which they will never able to match with digging the small piece of land back home. They will perhaps be willing to work for even less, driving down the labor prices, and undoing some of the strength they had gained since the adoption of the Labor Contract Law last year. The government is helping out by infrastructure spending in the 4 trillion Yuan stimulus package– including expansion of railways, building roads and housing - much of which will go to rural areas and small towns. It is also trying to boost domestic consumption and cheer the rural masses by offering a 13% subsidy on a range of home appliances ranging from washing machines to mobile phones.

While the new DVD player and a color television may serve as a temporary palliative and help the returned workers while away their time (of which they have no scarcity now) a more lasting smile on their faces can only be achieved through alternate meaningful employment. The workers need an alternative to a miserable though lucrative toil in the cities and leisurely but penurious existence at home. More needs to be done to equip the laid off workers with new skills which make them eligible for other employment opportunities in and around their homes.

Equally important will be to offer them advice, guidance as well as small loans to start village level enterprises which could offer a sustained source of income. Micro-credit, the business of giving small, mortgage free loans in rural communities, which has transformed the lives of millions of peasants in many countries, possibly has a major role to play in China too. The new motorcycle that a rural resident may buy, aided with a newly introduced 13% discount, needs to become a vehicle for entrepreneurship and its engine also serve as an engine for rural growth.